Standing Committee D

[David Taylor in the Chair]

Consumer Credit Bill

Clause 52 - Power of OFT to impose civil penalties

Alan Reid: I beg to move amendment No. 36, in clause 52, page 44, line 8, leave out from first 'is' to 'it' in line 10 and insert—'either—
(a) satisfied that a person (the ''defaulter'') has failed or is failing to comply with a requirement imposed on him by virtue of section 33A, 33B or 36A, or 
(b) dissatisfied with the conduct of the licensee,'. 
I am concerned that there is a loophole in the Bill. Amendment No. 36 was designed as a probing amendment to establish the Government's intentions. Under the Consumer Credit Act 1974, the Office of Fair Trading has the power to suspend or revoke a licence, but it was recognised that such a sanction might be too severe for certain offences, so the Bill is introducing a new sanction of requirements. 
The clauses that we debated this morning include provisions that gave the OFT new powers to impose requirements on licensees in cases in which it is dissatisfied with the conduct of a licensee or any of his associates. The procedure for requirements is that the OFT must first identify the fact that the licensee is carrying out bad practice before it can take any action. An example of bad practice could be late-night doorstep pressure-selling. Having identified the fact that a licensee is carrying out a bad practice, the OFT will write to the licensee imposing a requirement that that bad practice be stopped. However, only if the licensee continues in that bad practice—the bad practice specified in the requirement—can the OFT impose a civil penalty. In other words, this is a two-stage process that involves handing out a yellow card first, and only if the written warning is ignored and the bad practice continues can a penalty be imposed. 
I believe that there is a loophole in the procedure because there appears to be no sanction available to the OFT until after it has served the requirement. There appears to be no deterrent to bad practices committed before the OFT has identified the fact that the licensee has been guilty of bad practice and served the requirement. Civil penalties can be imposed only for continuation of the bad practice. 
Without a deterrent for first offences, I can imagine the boss of a rogue credit business saying to his salesmen and collectors, ''OK lads, go out, twist arms and pressure-sell all you like. We've nothing to worry about until the OFT finds out and gets round to serving a requirement on us.'' 
In practice, it could take a long time for the OFT to identify the fact that a particular rogue agency is  carrying out bad practices. It will have to identify the practices, collect evidence and serve the requirement. Moreover, victims may be too frightened to complain. The credit business will, of course, deny any allegation of wrongdoing, and so, in practice, it could take the OFT a long time to identify the pattern of bad behaviour, collect evidence and serve the requirement. Until that point, the rogue credit business would have nothing to worry about and it could continue with any bully-boy tactics it liked, without fear of penalty. 
I therefore believe that there must be a deterrent to prevent such behaviour from occurring. Giving the OFT the power to impose a civil penalty for unsatisfactory conduct, as specified in the amendment, would plug that loophole. I accept that the amendment might not be sufficiently detailed to be added to the Bill, but it is intended to be probing so as to give the Minister the opportunity to respond to what we believe to be a loophole—the lack of deterrent against any bad practice before the OFT serves a requirement.

Gerry Sutcliffe: I welcome you to the Committee's proceedings, Mr. Taylor, at the appropriate time of 4.30 pm. I believe you were here at 4 o'clock, alongside other members of the Committee, in anticipation of an exciting, challenging and forward-looking debate.
 I also welcome the hon. Member for Argyll and Bute (Mr. Reid) to the Committee, and am grateful for the spirit in which he moved the amendment. I hope to point it out to him that the amendment is not necessary, although I understand its probing nature. He is right that the clause is designed to allow the OFT to impose penalties if licence holders do not comply with a requirement placed on them by the OFT. Clause 38 introduces requirements to give the OFT the ability to deal with practices that cause consumer detriment but are not serious enough to mean that a licence will be revoked. The requirement must relate to the licensable business. It must also address the matter with which the OFT is dissatisfied, or it must ensure that the problem, or a similar problem, does not arise again. The OFT can impose a requirement on licensees when it is dissatisfied with their conduct. 
Requirements are a targeted and proportionate tool for dealing with problems. The amendment would allow the OFT to impose a financial penalty when dissatisfied with a licensee's conduct, without having first to impose a requirement to try to sort out the problem. We do not consider that a proportionate response and feel that it would be less likely to have the desired effect of improving the licence holder's performance. 
The OFT can issue a stop now notice under the Enterprise Act 2002 if the conduct is bad enough, which covers the point raised by the hon. Gentleman. The OFT may also revoke or suspend a licence if consumers are seriously at risk. We believe that the OFT has enough power to deal with ongoing situations, and it has the power to revoke licences if necessary. 
I hope to have shown with those assurances that the amendment is not necessary. I therefore ask the hon. Gentleman to withdraw it.

Alan Reid: The amendment is probing, as I said, and I shall examine what the Minister said about the 2002 Act. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Alan Reid: I beg to move amendment No. 37, in clause 52, page 44, line 20, leave out '£50,000' and insert
'10 per cent. of the licensee's gross annual turnover in the year in which the fine is imposed'.

David Taylor: With this it will be convenient to discuss amendment No. 35, in clause 52, page 44, line 20, at end insert—
'(3A) The amount specified in subsection (3) shall be reviewed by the Secretary of State within five years of the passing of this Act, and thereafter at five year intervals. 
(3B) The Secretary of State may, by regulation, amend the amount specified in subsection (3) following a review in accordance with subsection (3A).'.

Alan Reid: As I was saying in the debate on the previous amendment, I support the principle that the OFT should have the power to impose civil penalties on those who default on the conditions of their licence or any conditions imposed by the OFT, but I am concerned that the proposed maximum civil penalty of £50,000 might be too low in certain circumstances.
It is important that fines should be whatever is sufficient to secure compliance. To follow that principle, it should always be cheaper for rogue companies to comply with the licence than to pay the penalty. The penalty should always be bigger than the gain that companies could make from breaching the licence or any requirements, and it should not be hampered by a cash limit. For many large companies, £50,000 would be a drop in the ocean and it would not serve as a deterrent for bad practice. We should remember that bad practices could adversely affect some of the poorest and most vulnerable in society. 
The amendment would enable the OFT to impose a fine of up to 10 per cent. of a company's gross turnover. It would provide the OFT with the discretion to impose a fine proportionate to the offence, rather than the fine being capped at £50,000, which could be low for some companies. We took the figure of 10 per cent. of gross turnover from the Utilities Act 2000. There, too, it is the penalty for contravening the conditions of a licence, and I believe this formula to be appropriate to the Bill.

Charles Hendry: I welcome you to the Chair, Mr. Taylor.
We have heard from the hon. Member for Argyll and Bute that clause 52 provides the OFT with the power to impose a civil penalty on a licensee that has failed or is failing to comply with a requirement. Subsection (3) provides that that amount should not exceed £50,000. We agree in principle with the measure and with the level at which the cap has been set, and we are not persuaded by the Liberal Democrats' argument. 
A fine of 10 per cent. of gross turnover would almost certainly lead to the closure of an organisation and it represents a punitive punishment, although other aspects such as criminal negligence could be involved. None the less, it is not right to fix the cap in primary legislation. In 10, 20 or even 30 years, the top rate of financial penalty will be the same, but, due to inflation and economic growth, it would be a much lesser penalty than it would be today. 
It is 31 years since consumer credit legislation was last passed and £50,000 today is the equivalent of £7,000 in 1974—a sevenfold increase of equivalent value. People would be deterred by a penalty of £50,000 today, but it is far from clear whether a £7,000 fine would have any such effect. In the same way, if it is another 31 years until consumer credit legislation is next passed, a £50,000 fine will more than likely be regarded as a much lesser penalty than it is now. Indeed, if inflation is on average the same over the next 30 years as it has been over the past 30, the cap would need to be set at £350,000 in 2035 just to stand still. The Bill makes no provision for that to happen. 
Amendment No. 35, to account for that problem, would allow the Secretary of State to review the cap on the financial penalty at intervals of five years after the passing of the Bill. Further, it would grant the Secretary of State the power to adjust the cap by regulation, subject to his or her consideration of the review. That is a better way to ensure that the financial penalties imposed on licensees remain as significant and continue to have effect throughout the life of the legislation. 
I urge the Minister to break with the tradition of the past couple of days and accept amendment No. 35, due to the good sense it offers.

Gerry Sutcliffe: May I say at the outset that I am tempted by the offer made by the hon. Member for Wealden (Charles Hendry)? However, amendment No. 35 is not quite as excellent as the amendment we refused very early in our proceedings and again, although it is heading in the right direction, it is unnecessary. I shall explain why shortly.
First, however, to help the hon. Member for Argyll and Bute, we believe that the £50,000 limit is proportionate. We considered using the Competition Act 1998 and the figure of 10 per cent., but we decided that that would be disproportionate. We are not talking about cartel activity or the abuse of a monopoly or dominant market position, which is what that legislation tackles and which is the reason for using the figure of 10 per cent. of turnover. We are talking about individual infringements of specific conduct requirements. Fines of £50,000 will hit lenders where it hurts—in their pockets—but there must be a limit to ensure compatibility with human rights obligations. 
We should also bear it in mind that the cap of £50,000 is a limit, not a target. Some lenders will be fined less than £50,000, so it is possible to set a penalty that is proportionate both to the breach and to the licence holder's ability to pay. Also, multiple penalties will give rise to questions relating to the fitness of the licence holder. The figure of £50,000 is appropriate  and we ask the hon. Gentleman to withdraw the amendment. 
On amendment No. 35, as the hon. Member for Wealden said, the OFT is already required under the 1974 Act to advise the Secretary of State on the working and enforcement of the legislation, including the civil penalties. A set timetable would not add anything to the efficient use of the civil penalties provision and might suggest that the penalty should be reviewed only at five-yearly intervals, when, under current provisions, it will be reviewed whenever necessary. 
The power to amend the £50,000 limit is already in the Bill under proposed new section 39B(3) of the 1974 Act, in clause 53. The maximum penalty may be changed by order of the Secretary of State, as approved by an affirmative resolution in both Houses. We do not need to go down the route suggested by the hon. Gentleman, and I hope he does not press amendment No. 35.

Alan Reid: I still believe that the £50,000 limit is too low. We need a higher figure—I am bearing it in mind that the 10 per cent. figure is a cap—but I do not detect any support in the Committee, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.

David Taylor: The question is that clause 52 stand part of the Bill—

Charles Hendry: What about amendment No. 35?

David Taylor: Amendment No. 35 does not get called separately. When amendment No. 37 was withdrawn, the hon. Gentleman's amendment was also withdrawn, as he did not say that he wanted to press it to a Division separately.
Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: In the spirit of openness and trying to keep the Committee informed about what each clause does, I shall set out the power of the OFT to impose civil penalties, which we touched on in discussions on amendments. The clause means that licence holders who do not comply with requirements placed on them by the OFT will face civil penalties. There is a need for powers to censure licence holders exploiting consumers where withdrawal of their licences would not be proportionate. The requirements, which can be imposed through the provisions in clauses 38 and 39, will do that.
I shall refresh hon. Members minds regarding clauses 38 and 39. Clause 38 provides that the OFT may impose requirements on a licensee if it is dissatisfied with a matter relating to its licensed business. The requirements take the form of a notice requiring the licensee to do, not do, or stop doing something related to the licensable business in order to address the matter with which the OFT is dissatisfied or to ensure that the problem, or a similar one, does not arise again. 
Clause 39 enables the OFT to place requirements on supervisory bodies that hold group licenses. It can use its requirement powers to address a wide range of problems. As I said earlier today, if there were problems with the way in which certain employees explain credit agreements to customers, a requirement to train them could be imposed. Such a requirement might provide that sales representatives in a named branch should be trained to inform consumers how they can cancel agreements. If a debt collector's employees unfairly pressurise people by calling late at night, a requirement could stipulate that they should call only between 8 am and 8 pm. Such requirements may relate to persons other than licensees, but will be addressed to and be binding on licensees. They may require that particular people should not undertake specific activities, such as not collecting debts in person. 
The OFT must also be able to monitor licensees' fitness on the basis of up-to-date information, so penalties can be imposed for breach of information requirements through provisions in clause 45, which deal with duties to notify changes in information. 
I return to clause 52. Civil penalties will deter firms from not complying with OFT requirements. The OFT will impose penalties by issuing penalty notices to defaulting licensees. Any such notice must set out the OFT's reasons for imposing the penalty, the amount of the penalty and why it has been set at that level, and the deadline by which it must be paid. Any decision to impose a financial penalty is subject to the same procedural safeguards as other licensing decisions, such as the licence holder's right to a hearing before an adjudicator and to appeal to the Consumer Credit Appeals Tribunal, which is established under clause 55. The deadline for paying a penalty must not be earlier than the end of the appeals period. 
The maximum penalty that can be imposed by the OFT is £50,000 for each breach of a requirement. Penalties of £50,000 will hit rogue lenders where it hurts. Some hon. Members expressed concern that the limit is too low, and some that there is a limit at all, but it is right that licensees who may be subject to financial penalties should know the extent of the penalties that they may face. The limit also ensures that the legislation is compatible with human rights legislation. The £50,000 limit is proportionate. 
The limit in the Competition Act 1998 of 10 per cent. of turnover, which I used as an example earlier, would be disproportionate. We are not looking at companies with a monopoly market share built up over years, which is what the Act deals with. We are looking at smaller infringements. Some hon. Members suggest that the limit should be set by secondary legislation, but that power is introduced in clause 53(3). If the defaulter does not pay the penalty, the OFT may recover it, and the unpaid balance will incur interest. 
Some hon. Members suggest that firms will face penalties for dealing in extortionate credit. Penalties will be imposed only where OFT requirements have been breached. They are not fines for firms that have entered into unfair relationships—that issue will be dealt with by the courts and through other procedures.  It is for the courts to decide the appropriate form of redress in such cases. Neither are they fines for firms whose cases have been dealt with through alternative dispute resolution. It is for the Financial Ombudsman Service to decide the appropriate form of redress in such cases. If licensees are subject to several court cases, or if the alternative dispute resolution finds against them, the OFT is likely to reconsider their fitness to hold a licence. 
Civil penalties are sanctions for breaching OFT requirements, and licensees can easily avoid them by complying with the requirements. The penalties are a necessary deterrent to licensees causing consumer detriment, and a vital part of the OFT's new licensing regime.

Charles Hendry: We are generally happy with the clause, but I would be grateful if the Minister clarified a few aspects of it. How does he envisage that the OFT will decide on appropriate levels of penalty? He said that the maximum penalty for each breach would be £50,000; where there have been several breaches, could there be several fines of £50,000? How will the OFT go through the process of establishing what the right sort of penalty would be for individual actions that had been taken? Who would it consult in the process of doing that, and to what other bodies would it look to bring into the discussions on that? What sort of right of appeal is there against the OFT when it imposes such civil penalties?
Could the Minister also go a little further in clarifying what range of penalties would be available to the OFT? A fine is one element and revoking a fine would be another, but how many other options would it have, such as issuing warnings and, ultimately, if the breach of the rule and regulations were particularly serious, could it lead to imprisonment? In general, we are happy with the clause but some more clarification would be helpful.

Gerry Sutcliffe: I welcome the broad acceptance of the clause. As we have said before in relation to other clauses, the OFT is the responsible body and has to operate within the confines of the Cabinet Office concordat. It has to respond to Parliament in its annual report. Anything that it does must be proportionate. The hon. Gentleman is right to say that the maximum fine for each breach is £50,000. Each breach of the requirement brings into play the OFT looking overall at the licence, and whether the holder is a fit person. The OFT statement of policy is subject to consultation with the Secretary of State and the Treasury, but it would be up to the OFT to consider each case on its individual merits within the framework and the appeals mechanisms that exist: appeals to the adjudicator or, if necessary, to the tribunal. The safeguards are in place. Under the 1974 Act, it was disproportionate: it lead to the revocation of a licence and nothing else. This gives an opportunity for refinements and improvements. There are issues under the Enterprise Act 2002 in terms of the stop-now orders that can be put in place. The OFT can use a range of tools proportionately and reasonably in different circumstances. The level of any fine would reflect that, with a maximum of £50,000. 
There are other ways in which the OFT can deal with matters. It can consider action within the licensing regime, or the requirements that it outlined. It can also issue informal warnings about the conduct of individual companies, but there will be no prison sanction within the framework of the Act. However, if people commit fraudulent actions, criminal sanctions would be appropriate. 
I hope that, with those assurances and explanations, the hon. Member for Wealden will support clause 52. 
Question put and agreed to. 
Clause 52 ordered to stand part of the Bill.

Clause 53 - Further provision relating to civil penalties

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: Clause 53 describes the further provision relating to civil penalties. Clause 52 means that licence holders who do not comply with the requirements placed on them by the OFT will face civil penalties, and clause 53 sets out the procedure that the OFT must follow when deciding to impose a penalty. Under clause 52, the OFT may impose penalties by issuing a penalty notice to the defaulting licensee. The OFT must inform the licensee that it is minded to impose a penalty notice, and must set out the reasons why, set the amount of the penalty and give reasons why it has been set at that level. The OFT must also invite the defaulter to submit representations to an adjudicator. If any other penalties have been imposed for the same conduct, which the OFT is investigating, that must be taken into account. The OFT must also take into account any other steps that it might take in relation to the conduct in question, such as the revocation or suspension of a licence.
Where a penalty is imposed on a person who is responsible for group licences, the OFT must give general notice, which must set out what is required by the Act. Clause 53 is necessary to allow the OFT to inform the licence holder that it is minded to impose a penalty, and adjust the maximum amount of the penalty. It gives the defendant the power to make representations to the OFT in relation to the imposition of the penalty. The clause also enables the maximum penalty to be amended, if that proves necessary in time. 
Licensees can easily avoid civil penalties by complying with the OFT requirements. Penalties are a necessary deterrent to prevent licensees from causing consumer detriment. They are a vital part of the OFT's new licensing regime. 
Question put and agreed to. 
Clause 53 ordered to stand part of the Bill.

Clause 54 - Statement of policy in relation to civil penalties

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: Clause 52 means that licence holders who do not comply with requirements placed on them  by the OFT will face civil penalties. Clause 54 requires the OFT to prepare and publish a statement of policy, setting out how it will impose those penalties and the determination of amounts. The statement must be approved by the Secretary of State before it can be published and before any penalties can be imposed. The OFT must publish the statement, so that it comes to the attention of the people who might be affected. The clause requires the OFT to consult interested parties on the preparation or revision of the statement, and the OFT must publish the most recent version.
The clause means that the OFT must also have regard to the statement of policy when issuing penalties. It prevents the OFT from issuing a penalty to a licensee before the statement is published.

Charles Hendry: The guidance note from the OFT states that the draft Bill requires that as soon as practicable after the commencement of the relevant provisions the OFT will prepare and publish a statement of policy on the imposition of penalties under proposed new section 39A of the Consumer Credit Act 1974 and the determination of the amount of such penalties. When does the Minister envisage that that will be published? Clearly, the question of when is as soon as practicable and will be a matter of importance to those people who need to understand the full force of the Bill before they can comply with it.
How often would the Minister expect the statement of policy to be revised, and how would he expect it to be publicised? Would it be sufficient for revisions to be sent to all licensees, or would an advertisement have to be put in certain publications? Would further action be needed to ensure that those who needed to know of changes were informed about them?

Gerry Sutcliffe: This morning we became involved in definitions of reasonableness, responsibleness and unfairness. I should hope that the OFT would operate within its service agreements to get the required information speedily to the relevant stakeholders. There would be an onus on it to do so, because it could not impose penalties unless it had done so; it would be in its interest to do it, in so far as it was reasonably practicable. It would be done in the same way as the OFT operates when it ensures that stakeholders are made aware of the variety of methods of regulation and development.
I hope that the hon. Gentleman will accept that, and understand why the statement is necessary. All applicants will have the statement brought to their attention, and it will be available through the OFT website. I am sure that the hon. Gentleman will be pleased about that. The OFT will undertake publicity before the new provisions come into force, so that existing licensees will understand the new provisions and know where to find out more. They will be revised when necessary. 
Question put and agreed to. 
Clause 54 ordered to stand part of the Bill.

Clause 55 - The Consumer Credit Appeals Tribunal

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: Clause 55 establishes the Consumer Credit Appeals Tribunal as a new, independent tribunal, which will hear appeals against determinations made by the OFT under the relevant provisions. Those include appeals against decisions to revoke, vary or suspend a licence, or impose a requirement or financial penalty. Under the 1974 Act, appeals are made to the Secretary of State and heard by a specialist panel on his behalf. We are removing the link with the Secretary of State to follow best practice on appeals. The independent tribunal will come under the supervision of the Department for Constitutional Affairs and the Lord Chancellor will make rules on appeals. More detail about proceedings before the tribunal is given in proposed new schedule A1 to the 1974 Act. This clause concerns the various possible treatments of businesses, which will always have the opportunity to submit representations against an OFT determination and will be able to appeal a determination to an independent tribunal. I beg to move that the clause stand part of the Bill.
Question put and agreed to. 
Clause 55 ordered to stand part of Bill.

Schedule 1 - Schedule A1 to the 1974 Act

Gerry Sutcliffe: I beg to move amendment No. 28, in schedule 1, page 57, line 33, after 'limits', insert
'(including the period specified for the purposes of section 41(1) of this Act)'. 
The amendment ensures that the power of the tribunal to make procedural rules allows it to extend the time limit within which an appeal must be brought. That is in line with the current appeal system under which the time for an appeal can be similarly extended. I hope that the Committee will support the amendment. 
Amendment agreed to. 
Question proposed, that this schedule, as amended, be the First schedule to the Bill.

Gerry Sutcliffe: This schedule provides further detail about the Consumer Credit Appeals Tribunal, established in clause 55. The tribunal has been set up to hear appeals against determinations of the OFT, replacing the current system of appeals to the Secretary of State. For example, appeals might be heard against decisions to revoke, vary or suspend a licence, or to impose a requirement or a financial penalty. The schedule establishes the posts of president and deputy president of the tribunal, and appoints a panel of chairmen and a lay panel. It enables the removal of panel members in the case of incapacity or misbehaviour. Paragraphs 5 and 6 enable the Lord Chancellor to appoint and pay for the staff of the tribunal and to pay the president, deputy president  and members. It also includes arrangements for the structure of the tribunal and its hours and procedures.
Paragraph 10 lists some of the matters on which the Lord Chancellor may make rules. They are primarily practical arrangements for appeals such as timing, who may appear on behalf of a party, hearings and disclosure of information. It also covers problems such as non-compliance with the rules, administrative errors and what happens if a member of a tribunal becomes unable to act. The list is not exhaustive. 
Paragraph 12 sets out the courses of action that the tribunal can take in disposing of an appeal. It is able to confirm, quash or vary the OFT's decision, remit the matter to the OFT for consideration and determination and give directions to the OFT to give effect to the decision. Paragraph 13 states that decisions may be taken by majority, and paragraph 14 enables the tribunal to order that the OFT pay costs to the appellant in a number of given circumstances. In summary, the schedule provides the nuts and bolts of how the tribunal may work. As is usual in the case of tribunals, that will be elaborated on in rules made by the Lord Chancellor. I beg to move that the schedule be agreed to.

Charles Hendry: I thank the Minister for his clarity in setting out those details with regard to tribunals. I shall be grateful if he will respond to a few questions, so that we have a little more information before we decide whether the schedule be agreed to.
First, on panels, paragraph 3(3) states: 
''The Lord Chancellor shall also appoint a panel of persons who appear to him to be qualified by experience or otherwise to deal with appeals of the kind that may be made to the Tribunal.''
What sort of qualifications do we think that the Lord Chancellor will look for? It is important to understand what expertise will be expected. Or will those people involved just be old mates from his chambers, as seems to have happened in other cases? 
Secondly, in paragraph 5, we read on remuneration and allowances: 
''The Lord Chancellor may pay to a person in respect of his service—as the President . . . as a member of the Tribunal, or as a person appointed under paragraph 7(4), such remuneration and allowances as the Lord Chancellor may determine.''
Have we any indication of how much we are considering paying? Will people be taking on what is essentially a full-time job, or will they be performing a role for a day or two a week? I have no sense of how much time is going to be involved for those who take part in the tribunals' and, therefore, whether we will be paying them reasonable salaries or simply reimbursing them for losses of earnings elsewhere. How many members does the Minister envisage being involved in the tribunals? Also under paragraph 14 on costs, has he any sense of the level of cost that may be paid if the OFT is deemed to have acted inappropriately? Elsewhere in the Bill a limit of £50,000 is set. Does he envisage there being a limit for the maximum level of a fine or penalty cost that can be imposed on the OFT when it is deemed to have acted inappropriately?

Gerry Sutcliffe: Again, I am grateful for the hon. Gentleman's broad welcome for the setting up of the new tribunal. On the way the members are chosen, he  is right to say that the Lord Chancellor has many friends, but the Lord Chancellor is subject to the same rules as anybody else. Members will be appointed by the Lord Chancellor in accordance with the qualifications stipulated in the schedule. Members of the panel of chairmen must have been qualified lawyers for at least seven years. Members of the lay panel must appear to the Lord Chancellor to be qualified by experience to deal with appeals made to the tribunal.
Members of the existing panel will be able to transfer to the new tribunal with the skills that they brought to the Secretary of State's panel. The provision for that is in paragraph 26 of schedule 3 and the normal remunerations would be made. Again, if the hon. Gentleman would like me to, I will set out in a letter the details such as the likely frequency of meetings. It will not be a full-time requirement and will be based on the number of members who are required to hear a case. That would have to be reviewed after a period of time, depending on the number of cases and the number of issues to be dealt with. I will let the Committee have the details. With those explanations, I hope that the Committee will support the schedule. 
Question put and agreed to. 
Schedule, as amended, agreed to.

Clause 56 - Appeals to the Consumer Credit Appeals Tribunal

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: Clause 56 relates to the new Consumer Credit Appeals Tribunal. The tribunal is being established to hear appeals against determinations of the OFT. It replaces the current system of appeals to the Secretary of State. The clause amends section 41 of the 1974 Act, which contains the existing provisions for appeals. The clause repeals subsections (2) to (5) of section 41 and inserts new subsections.
An appeal should be made by sending the tribunal a notice of appeal in the form specified by the rules. The appeal is by way of a rehearing. This means that the merits of the case are considered by the tribunal on the day that the appeal is heard. The tribunal is able to consider evidence which was not available to the OFT when it made its determination. I hope that hon. Members will support the clause.

Charles Hendry: I have a few further questions on the appeals to the Consumer Credit Appeals Tribunal. What guidance does the Minister expect to be given on the time limits for appeals? Clearly there has to be a final time limit. Does he have anything in mind? Will he give us some further examples of the sort of things that people might appeal against? Could a prospective licensee appeal against a decision not to issue a licence? Could it be against a decision to revoke a licence? Would it be against the level of charges? Could it even be on matters that might otherwise have gone to the courts? We had a lot of discussion on the earlier stages of the Bill about trying to keep things out of the courts. Are there elements of the debate about fairness  and unfairness that can be resolved in this way without the need to go to court?

Gerry Sutcliffe: Again, the hon. Gentleman is heading in the right direction with his questions. He asked me how long after a determination a person can appeal to the tribunal. The rules will set limits in relation to anything that is to be done for the purposes of an appeal and for the extension of such time limits. The rules are likely to specify that an appeal must be lodged within 28 days. That is the period under the current regulations and is also in line with normal tribunal practice.
 On the question of who can appeal and on what grounds, the relevant sections of the 1974 Act and clauses of the Bill set out who can bring appeals to the tribunal. In general, appeals can be brought by those to whom the OFT's determination relates. As the hon. Gentleman says, they can be brought by a person whose licence has been refused, suspended, revoked, granted in different terms or varied. Likewise, a person who had a licence requirement imposed on him, which was not the same as the one he had suggested or varied, could appeal. Similarly, those named in requirements or whose employment was in some way affected by a requirement may appeal. The penalties imposed for breach of requirements and licences or of the information provisions can also be appealed. 
I hope that having heard that explanation hon. Members will support the clause. 
Question put and agreed to. 
Clause 56 ordered to stand part of the Bill.

Clause 57 - Appeals from the Consumer Credit Appeals Tribunal

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: Clause 57 deals with appeals to the new Consumer Credit Appeals Tribunal. The tribunal is being set up to hear appeals against determinations of the OFT. It replaces the current system of appeals to the Secretary of State. The clause inserts a new section 41A after section 41 of the Act. It enables appeals on a point of law to be made from the tribunal to the Court of Appeal in England and Wales and in Northern Ireland, and the Court of Session in Scotland. Appeals can be brought by either the appellant or the Office of Fair Trading. Leave to appeal can be given by the Consumer Credit Appeals Tribunal; or, if the tribunal refuses to give its leave, an application for leave to appeal can be made to the Court of Appeal or the Court of Session directly.
The higher court may, if it considers that the tribunal's decision was wrong, quash or vary the decision. It may also substitute its own decision, or remit the matter to the tribunal for a rehearing. Under the clause, tribunal rules may make provision in relation to consequential matters on appeals. Those rules might relate to the form of requests for leave to appeal, or time limits. Leave to appeal to the House of  Lords can also be given. I hope that the Committee will accept the clause. 
Question put and agreed to. 
Clause 57 ordered to stand part of the Bill. 
Clause 58 ordered to stand part of the Bill.

Clause 59 - Financial services ombudsman scheme to apply to consumer credit licensees

Gerry Sutcliffe: I beg to move amendment No. 27, in clause 59, page 48, line 25, after 'licence', insert
'or was authorised to carry on an activity by virtue of section 34A of the Consumer Credit Act 1974'. 
The amendment will ensure that customers or a business acting in authorisation under clause 32 have access to the financial ombudsman scheme. It ensures that provision for authorisations work properly without diminishing consumer protection and I hope that the Committee will support it. 
Amendment agreed to. 
Question proposed, That the clause, as amended, stand part of the Bill.

Gerry Sutcliffe: The clause deals with the financial services ombudsman scheme to apply to consumer credit licensees. Consultation showed that consumer and industry groups strongly support the introduction of an ADR system for consumer credit. In most cases, consumers currently have no other option than to go to the courts to seek redress against unfairness, which often proves daunting and expensive for consumers and industry. Most credit provided by banks and building societies is already covered by ADR, and some trade associations run their own ADR schemes. However, access for consumers to ADR is not universal and businesses can in many cases opt out. ADR will provide wider and easier access for both consumers and industry to an efficient and cheap process of dispute resolution. It means that most consumers no longer have to be worried about going to court to challenge unfairness. It allows disagreements to be settled quickly and simply, and consumers have a better chance of obtaining fair redress against unfair practices. It will encourage fair standards throughout the industry. Ultimately, these changes will increase consumer confidence in the market, which in turn benefits the industry.
The ADR will be provided by the Financial Ombudsman Service. The FOS was chosen as the ADR provider for consumer credit matters because it already deals with the financial services sector generally. Under the Financial Services and Markets Act 2000, the FOS provides ADR for two existing jurisdictions, the voluntary jurisdiction and the compulsory jurisdiction. The clause adds a third—the consumer credit jurisdiction. About 80 per cent. of people who responded to the consultation said they would like the FOS to provide ADR under the Consumer Credit Act 1974. 
The FOS's existing experience and expertise will ensure a smooth transition to the new ADR scheme, more so than if another provider were used. Clause 59  describes the conditions that must be satisfied for a complaint to be dealt with by the FOS and also shows how different activities will be made subject to the consumer credit jurisdiction. 
The Secretary of State for Trade and Industry will introduce types of credit business into the consumer credit jurisdiction by order. The order will be agreed with Her Majesty's Treasury Ministers. It will set out one or more of the types of business for the new licence categories: consumer credit business, consumer hire business, credit brokerage, debt adjusting, debt counselling, debt collecting, debt administration, credit information services and credit reference agencies. Different types of business will be introduced on a staggered basis. 
The rate at which businesses are introduced into the consumer credit jurisdiction will be agreed with the Treasury after consultation with the FOS and the Financial Services Authority. That will ensure that the FOS can cope with the additional work load and will not risk being overloaded. 
Once a type of business is introduced, the FOS will make rules setting out the activities that it will consider within that type of business. That will provide maximum symmetry between the existing compulsory jurisdiction, covering banks and building societies, and the new consumer credit jurisdiction, covering other consumer credit firms. Those rules will ensure that a consumer's ability to obtain redress is balanced with the capacity of the FOS to deal with extra work. The FOS will also make procedural rules for the operation of the consumer credit jurisdiction. The FOS must hold a public consultation before making any rules, and rules must be approved by the FSA. 
For the FOS to become involved, a consumer must want it to deal with the complaint and must be eligible. A person is eligible if they are the individual or are directly related to the individual through the agreement and they are covered by FOS rules. The credit business must have been holding a standard licence when the complaint occurred, and the complaint must fall under a type of business included in the consumer credit jurisdiction. The complaint must not be able to be dealt with under the existing compulsory jurisdiction of the FOS. That ensures that businesses do not become subject to multiple jurisdictions. 
A consumer who wants to complain about a firm can take their complaint to the FOS. On receiving a complaint from a consumer, the FOS will first check that the firm's internal complaints handling procedures have been exhausted. Firms currently have eight weeks to settle complaints before the FOS will become involved. At the end of that period, if the complaint has not been resolved, the firm will be obliged to let the consumer know about the FOS. Then, if all the criteria that I mentioned have been met, the FOS will consider the complaint. 
Before opening a case, the FOS will try to settle the complaint informally. If that is unsuccessful, the FOS will open a case to investigate the complaint. Much of the work of the FOS is carried out by correspondence,  so that neither consumers nor businesses need appear at a hearing. After considering the case, the FOS will issue an adjudication. That stage of the case may be handled by a member of FOS staff other than the ombudsman. If either party is unhappy with the adjudication, they can request that the ombudsman review that assessment and make a determination. 
The FOS makes decisions based on what is fair and reasonable in each case. It takes into account the law, regulations, the regulator's rules, relevant codes and good industry practice. That ensures that, within the legal framework, the FOS can come to a practical common-sense solution that has a better chance of being acceptable to all parties involved. It can order a range of imaginative redress mechanisms from either party to bring things to a just and amicable solution. If the consumer accepts the ombudsman's final decision, it is binding on the business. The FOS decision can be enforced through the courts, and the FOS can inform the OFT of its determinations so that it can take any necessary regulatory action. 
The clause is necessary to provide consumers with better and more accessible opportunities for redress against unfair practices. I hope that, with that explanation, the Committee will accept the clause.

Charles Hendry: I am grateful to the Minister for such a detailed exposition of the clause, which is a very important aspect of the Bill. I would be grateful, though, if we could return to the types of business. Mr. Taylor, you were sadly absent from the Room this morning when we had a lively and interesting—I would not go as far as saying ''riveting''—discussion about the types of business, and it just seems unfair that because you were out of the Room you should not be given a chance to be part of it.
Paragraphs (a) to (i) of proposed new section 226A(3) list a range of types of business. The concern that we discussed this morning, on which we did not quite reach a conclusion, is that although that is an exhaustive list of types of business as we currently know them, we cannot be certain that they will still be the types of business that exist 30 years ahead. New types of business may or may not have been started. 
The Minister asked me what types of business I had in mind that could be started up in the years to come. If I had that degree of vision and knew what multi-billion pound businesses there would be in 30 years' time that no one had yet thought of, I would not be sitting here in Committee but would be out there starting one, or, at the very least, I would be down at William Hill's putting a few pounds on the 2.40 pm at Lingfield park tomorrow afternoon. 
Expecting us to know what types of business will exist is perhaps unreasonable, but it is not unreasonable to say that we cannot all have the foresight to say what new types of business might arise, and that we should perhaps be covered by the ombudsman's services. 
I therefore ask the Minister to go away and reconsider the matter. I do not want to be rude by telling him to go away today, but I do ask him to think further about it after this sitting and before Report to ascertain whether it would not be unreasonable to  amend the Bill so that the list could be reviewed every five years. 
After each five-year period, we will know the types of business that might be emerging and whether they are services that should be considered. My simple concern is that the Bill should give us the scope to protect consumers, which we are all trying to do, against the types of business that are not currently major players but that will come along in years to come offering credit services. 
If we tie up the legislation as it stands, we deny ourselves the chance to keep it up to date and to give consumers the length and breadth of protection that we seek to offer them. I simply ask the Minister to say that he will reconsider the possibility of the Secretary of State reviewing the list every five years, and that if new types of business have opened up, the Secretary of State should have the power to include them in the list.

Adrian Bailey: I welcome the measure, but will the Minister clarify further how the scheme would apply, bearing in mind the remarks made on Second Reading by my right hon. Friend the Member for Leeds, West (John Battle), which I endorsed, about the need for a complaints procedure that would enjoy the confidence of potential victims of unfair credit practices, and be mindful of the fact that many of the people who fall foul of credit companies have low levels of education, a great fear of any court or judicial processes and a great fear of the organisation that is lending them money?
According to the provisions, people have to exhaust the internal procedures of the credit company before they can use the financial ombudsman's service. I understand the reason for that, which is the need to avoid the ombudsman's service being swamped by sometimes trivial or inconsequential cases. On the other hand, we must ensure that the person who perceives that they have been unfairly treated does not feel intimidated in undergoing a process that would enable them to redress their grievance. 
Will the Minister reassure us that everyone who enters into a credit agreement must be informed in the simplest and clearest way of the avenues that are open to them if they feel unfairly treated, and that there should be severe penalties for any company that uses any form of intimidation that stops anyone using the provisions that are available to them?

James Brokenshire: I shall build on the point about ease of access to the ombudsman's scheme and on the several comments made about the need to ensure that the scheme efficiently and effectively gives access to justice, which is a phrase that we have used many times in this debate, so that people can resolve issues.
I understand that the subtle little amendment in new section 226A(2)(f), which states that 
''the complaint cannot be dealt with under the compulsory jurisdiction'',
is intended to cover situations in which a firm is regulated under the Financial Services and Markets Act 2000. I want an assurance that there is an interconnection between the two regimes and some link between the Financial Services Authority and the Office of Fair Trading. If someone has a complaint, they want it to be dealt with efficiently and effectively. They do not want to be passed round the houses, with the ombudsman saying that the problem has nothing to do with that service and that they will have to launch a separate complaint to the FSA under the regime set out in the Financial Services and Markets Act 2000. That is the last thing that we would want to happen. 
If someone has a legitimate concern, they are likely to be under a great deal of pressure and wanting to get things resolved quickly. They will feel at the end of their tether, so I want some assurance that there will be a joined-up approach. I know that the Minister kindly has circulated papers on the joint working memorandums that have been agreed between the OFT and the FSA. However, there must be something in the system to ensure that if people have legitimate complaints, they are dealt with efficiently and effectively.

Gerry Sutcliffe: Again, I welcome the contributions from all hon. Members in trying to ensure that we get the provisions right, as they are a significant step forward from what is in the 1974 Act. It is right and fair for individuals to go through a company's internal complaint procedures, and I agree with my hon. Friend the Member for West Bromwich, West (Mr. Bailey) that that should not be about intimidation. There is also an eight-week time limit for that procedure.
Consultation showed that, for most people involved, the FOS was the preferred option because of its experience in equities. To answer the question of the hon. Member for Hornchurch (James Brokenshire), the consumer credit jurisdiction under the FOS will not fall within the regulatory scope of the FSA, so there will be no duplication or confusion. The consumer credit jurisdiction will cover only cases that are not currently dealt with under the compulsory jurisdiction. There are three jurisdictions, and it will be clear what falls within each.

James Brokenshire: I am sorry to press the Minister on this point. If that is the case, information should be made available to borrowers so that they know that, if the ombudsman scheme is not available to them, what their rights of redress are. A problem is likely to occur when some form of remedy should have been followed, and I would like an assurance that some information will be provided so that people can make a proper complaint.

Gerry Sutcliffe: Information needs to be provided to the borrower or the borrower's representative through citizens advices bureaux or whoever else takes up the individual cases, which relates to the point made by my hon. Friend the Member for West Bromwich, West about people's inability in times of hardship and concern to understand fully the redress mechanisms that are available. That is where the advice services can come into play. We would also want the information  to be included on the OFT information sheets that we mentioned earlier in relation to dispute resolution.
It is important that the system works. Most of the FOS work is done through correspondence, so the process should be speedy and less threatening to the individuals participating. I would hope that the ADR will be what we intend: a quick, common-sense system that meets all requirements. 
That brings me on to the hon. Member for Wealden. He seems to like five-year cycles, as they keep recurring in his amendments. Much as I have sympathy with his line of thought, his proposal is not needed. The scope of the ADR is to cover all consumer credit licence businesses, except holders of group licences, for all disputes arising under the Consumer Credit Act. We do not envisage any unforeseen circumstances in terms of the ADR's coverage, and it is not dissimilar to what we were discussing this morning. 
With those explanations, I commend the clause to the Committee. 
Question put and agreed to. 
Clause 59, as amended, ordered to stand part of the Bill.

Schedule 2 - Part 3A of Schedule 17 to the 2000 Act

Gerry Sutcliffe: I beg to move amendment No. 29, in schedule 2, page 60, line 41, at end insert—
'( ) Consumer credit rules under sub-paragraph (3) may authorise the scheme operator to dispense with or modify the application of such rules in particular cases where the scheme operator— 
(a) considers it appropriate to do so; and 
(b) is satisfied that the specified conditions (if any) are met.'. 
Before complaints are dealt with by the FOS, firms are allowed time to resolve them directly; most complaints are resolved in that way. It is, however, necessary that firms deal with complaints expeditiously, and the FOS will have powers to set rules for that purpose. 
There will be occasions when it is appropriate for a firm to have longer to resolve a complaint or a particular type of complaint, and the amendment will give the FOS the power to waive the rules when appropriate. An example of such a situation would be when the FOS is dealing with a case that has wider implications. Firms will be allowed longer to respond to similar complaints so that the FOS can make a decision on the case with wider implications first, and firms will then be able to respond to complaints in line with the FOS decision. I hope that the Committee will accept that explanation and support the amendment. 
Amendment agreed to. 
Question proposed, That this schedule, as amended, be the Second schedule to the Bill.

Gerry Sutcliffe: Schedule 2 will be inserted into schedule 17 of the Financial Services and Markets Act 2000. It sets out more detail about the operation of  the consumer credit jurisdiction introduced by clause 59.
The schedule will require the FOS to make procedural rules for the operation of the consumer credit jurisdiction. The rules must set down a time limit within which complaints can be referred to ADR, which can be extended only by an ombudsman. The FOS can also require all holders of standard licences to establish and maintain internal complaints handling procedures, and it can make rules to say that a complaint will not be dealt with until the consumer has exhausted those procedures. 
Within the rules, the FOS will set out the process to be followed for the reference of complaints, their investigation, their consideration and their determination by an ombudsman. The FOS will be able to dismiss frivolous or vexatious complaints and provide that, in the early stages, the complaint can be handled by a member of FOS staff other than the ombudsman. 
The schedule enables the FOS to make rules specifying the fees that licensees must pay for the ADR scheme and provides that the payment of any compensation awarded by the ombudsman may be enforced through a court. It also sets out the procedure that the FOS must follow when making, amending or revoking any rules. The FOS is required to hold a public consultation before making any rules. Before the rules can be made final, they must be approved by the Financial Services Authority. The FOS must also take steps to make the approved rules available to the public. Finally, new paragraph 16F sets out the steps the FOS must take to verify the rules. 
The schedule is necessary to ensure that the FOS rules and procedures are clear and comprehensive. It allows the FOS to make the rules it needs to ensure the ADR scheme is as effective and transparent as possible for both consumers and business.

Charles Hendry: I would be grateful for a couple of points of clarification.
First, the fee section in new paragraph 16C states: 
''Consumer credit rules may require a respondent to pay to the scheme operator such fees as may be specified in the rules.''
Can the Minister make it more clear what those fees will be for? Will they be penalties or fines? What will they be for and why will people be paying those fees to the scheme operator? 
Secondly, the paragraph on procedure for consumer credit rules, new paragraph 16E, reads: 
''If the scheme operator makes any consumer credit rules, it must give a copy of the them to the Authority without delay.''
What does the Minister mean by the reference to making consumer credit rules? There has been a lot of debate and discussion as the Bill has gone through Committee, and that may be the clarification that we have all sought. Is there the scope to avoid issues going to court, for example, by having rules and guidelines clarified and set down so that both lenders and borrowers have a clearer understanding of what is permissible under the legislation? If that is the case, that would be very welcome.

Gerry Sutcliffe: The fees for the ADR will make it work and will cover the costs of the scheme. It will be possible, I think, for the first two cases to be free for businesses, but the fees relate to the cost of the overall scheme.
The overlap with the courts can arise in two ways. First, the consumer might want to make a complaint to the FOS, but the firm might start court proceedings. Where the court considers it appropriate, it can stay those proceedings while the consumer makes the complaint to the FOS. Secondly, the complaint might be taken straight to the FOS, but the ombudsman might consider that the courts would be better suited to deal with it. However, the FOS can informally discuss things and try to reach an informal arrangement. It can also decline to deal with a case if it involves a third party over which it has no jurisdiction or if the complaint appears to be solely about the legitimate exercise of a firm's commercial judgment in setting an interest rate and it would be more appropriate for the court to consider the rate-setting on the basis of expert evidence. 
In general, there is no prescribed mechanism for how the FOS and the courts will work together in practice, but we anticipate that they will co-operate and complement each other. The idea is to have an informal set of circumstances before the case proceeds to the formal FOS decision. If the FOS cannot deal with the case, it can go to the court. Equally, the court can refer an issue to the FOS. 
That is a good way of dealing with these difficult situations. The process will not be off-putting for consumers, because most things will be in writing, and their representatives can be involved. That is a good way of trying to resolve difficulties within the context of the Bill's overall aim of achieving greater transparency, with pressure on lenders to lend responsibly and on people fully to understand their rights.

Charles Hendry: I am genuinely grateful to the Minister for that clarification. To use his own words, it was good, but not excellent. I would be grateful, however, if he could go into a bit more detail about the fees. Is he saying that people might be charged for using the financial ombudsman service? When we refer constituents to the local government ombudsman or the parliamentary ombudsman, there is no charge for using them. I am not clear whether the fees that we are talking about are for people who make an application to the ombudsman to have their case reviewed or whether they are for something entirely different. Are other ombudsmen able to charge fees in the same way?

Gerry Sutcliffe: Again, I am grateful to the hon. Gentleman, and I apologise to the Committee for not explaining the point clearly. The fees are a levy on business. The business world will have to pay a levy towards the cost of the ADR scheme, but there will be no cost to the individual who makes a complaint to the FOS. As I said, the levy will sometimes mean that the first two cases are free for business and will not attract a charge, although subsequent cases will. I make it clear, however, that the service is free to consumers. I hope that that clarifies the point. 
Question put and agreed to. 
Schedule 2, as amended, agreed to.

Clause 60 - Funding of ombudsman scheme

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: I hope that my remarks on clause 60 will further clarify the funding of the ombudsman's scheme for the Committee. The clause sets out the arrangements for the funding of the compulsory ADR. In line with the best practice principles underpinning the funding of the ADR scheme, it should be self-funding and free to the consumer. As the clause states, all standard licence holders not already covered by the compulsory jurisdiction will pay to cover the costs of the FOS in setting up and running the consumer credit ADR.
Those costs will be met in two ways. First, businesses under the jurisdiction of the FOS will be charged a small levy, which will be set by the FOS with the approval of the Financial Services Authority. The levy is likely to be between £10 and £20 per year. 
Secondly, a case fee will be payable by those businesses whose complainants are considered under the ADR scheme. The fee will also be set by the FOS with the approval of the FSA and is likely to be about £360 per case. The majority of firms will never pay the case fee. It is unlikely that all complaints will require ADR, and those firms that now come before the FOS get the first two cases a year free. The ADR levy will be collected by the OFT with the licence fees, and the money will be passed on to the FOS. The OFT is best placed to collect the money, as it already has details of the all Consumer Credit Act licences. The OFT can charge extra for costs incurred in collecting the levy, and the FOS will periodically reimburse the OFT. The clause is necessary to provide funding for the ADR scheme. I hope that I have made it clear to the Committee what we seek to achieve.

Charles Hendry: I am grateful to the Minister for that explanation. I draw his attention to proposed new section 234A(9), which states:
''As soon as practicable after the end of—
(a) each financial year of the scheme operator, or
(b) if the OFT and the scheme operator agree that this paragraph is to apply instead of paragraph (a) for the time being, each period agreed by them, the scheme operator must pay to the OFT an amount representing the extent to which collection costs are covered in accordance with subsection (2) by the total amount of the contributions paid by the OFT to it during the year or (as the case may be) the agreed period.''
I take it that that means that the OFT should be reimbursed by the ombudsman for its costs. What happens with trading standards departments? As we heard earlier, they will be carrying out some of that work on behalf of the OFT. Will they be eligible to have their costs covered for work that they have done for the OFT? In that regard, subsection (10) of the proposed new section would appear to be a difficulty, because it states: 
''Amounts received by the OFT from the scheme operator are to be retained by it for the purpose of meeting its costs.''
That suggests that the OFT would not be able to pass on funds to trading standards departments. Will they be covered for the costs that they incur? Will subsection (10) allow money passed to the OFT to be passed on to trading standards departments to reflect the work that they have done?

Gerry Sutcliffe: I can understand where the hon. Gentleman is coming from, but we are talking about the working of the ADR scheme, and it is not envisaged that trading standards departments will be involved in the collection process. The OFT will do that, so there will be no need for the OFT to reimburse trading standards departments.
Question put and agreed to. 
Clause 60 ordered to stand part of the Bill.

Clause 61 - Consequential amendments relating to ombudsman scheme

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: The clause makes consequential amendments to the 1974 Act and the Financial Services and Markets Act 2000, to allow for the introduction of an alternative dispute resolution scheme.
The clause makes various amendments to the 2000 Act. It adds references to the consumer credit jurisdiction alongside references to the voluntary and/or compulsory jurisdiction where appropriate. That ensures that the consumer credit jurisdiction can operate effectively alongside the existing jurisdictions—that deals with the point raised by the hon. Member for Hornchurch. An amendment to the 2000 Act will allow the FOS to specify the maximum limit of compensation that can be awarded under the consumer credit jurisdiction. 
Another change provides for regulations to be made to allow the FOS to disclose information about cases and the decisions to the OFT. That information can be used by the OFT in deciding whether a lender is fit to hold a licence. Under the clause, the OFT can also provide information and advice to licensees on the introduction and operation of the ADR scheme. That information will be agreed in advance with the FOS. Further details on how the OFT and the FOS will work together will be set out in a memorandum of understanding between the two organisations, a draft of which has been seen by the Committee. 
The clause is necessary to ensure the consequential amendments are made to the 1974 and 2000 Acts. I hope that the Committee will support it. 
Question put and agreed to. 
Clause 61 ordered to stand part of the Bill.

Clause 62 - Monitoring of businesses by OFT

Question proposed, That the clause stand part of the Bill.

Gerry Sutcliffe: I know that the monitoring of businesses by the OFT has been of concern to some hon. Members. The clause imposes a general duty on the OFT to monitor businesses being carried out under licence.
The clause amends section 1 of the 1974 Act, which sets out the OFT's general functions. That means that the OFT will have a clear and ongoing duty to monitor the fitness of licensees. The OFT will be able to take a risk-based approach. Those business sectors that pose a higher risk to consumers will be subject to more intensive monitoring. The OFT will use the information-gathering powers in the Bill to fulfil the duty to monitor licences. That will result in better protection for consumers and more effective use of OFT resources. I hope that the Committee will support the clause. 
Question put and agreed to. 
Clause 62 ordered to stand part of the Bill. 
Clauses 63 to 69 ordered to stand part of the Bill.

Schedule 3 - Transitional Provision and Savings

Gerry Sutcliffe: I beg to move amendment No. 24, in schedule 3, page 64, line 7, leave out 'payable' and insert
'that are required to be paid'. 
This is a technical amendment designed to make the wording of the paragraph consistent with section 130A of the 1974 Act, to which it relates. It is a straightforward amendment, and I hope that the Committee will support it. 
Amendment agreed to. 
Question proposed, That this schedule, as amended, be the Third schedule to the Bill.

Gerry Sutcliffe: The schedule concerns transitional provision and savings. It makes certain transitional provisions for the coming into operation of many different parts of the Bill. It is important to ensure the smooth commencement of the provisions, especially where they apply to existing agreements.
Question put and agreed to. 
Schedule 3, as amended, agreed to. 
Clause 70 ordered to stand part of the Bill.

Schedule 4 - Repeals

Amendment made: No. 30, in schedule 4, page 69, line 38, at end insert— 
'(aa) the definition of ''costs'';'.—[Mr. Sutcliffe.]
 Question proposed, That this schedule, as amended, be the Fourth schedule to the Bill.

Gerry Sutcliffe: The schedule repeals various sections of different legislation. The changes are important as a consequence of the Bill.
Question put and agreed to. 
Schedule 4, as amended, agreed to.

Clause 71 - Short title, commencement and extent

Question proposed, That the clause stand part of the Bill.

Charles Hendry: It would not be appropriate for us to reach the end of the Bill without having a further point of clarification from the Minister, to which he will probably say, ''I hear where you're coming from'', and then explain why he did not really understand where I was coming from at all. There are a couple of points here, which I hope that he can clarify.
Subsection (2) says that different provisions can be introduced at different times, which is welcome, but can the Minister tell us what consultations he will now have with the industry to ensure that he fully understands which measures require a longer period before implementation? As he will appreciate, significant software changes will be required before the Bill can be enacted. It was some six years before all aspects of the last Act came into force. Clearly, we would not expect this to take six years, but there is a strong case for showing flexibility about different provisions coming into force at different times. I hope that the Minister will be prepared to have constructive discussions with the industry to ensure that that can be done properly. 
Can the Minister also say a little about the Northern Irish aspects of the Bill? Normally, this would have been a devolved matter for the Assembly, but because it is suspended, that is not possible. What will happen when, we hope, the Northern Ireland Assembly is reformed? Will it pass its own legislation in this area, and will it pass its own amendments? How would that take place? We hope that the suspension of the Northern Ireland Assembly is only temporary. I can see that a furious amount of scribbling is going on, and I am going on so that the Minister can obtain more guidance before he has to respond. Can he tell us what will happen when the Assembly is brought back into being, and how can Northern Ireland adapt the Bill to the needs of the Province?

Gerry Sutcliffe: I understand where the hon. Gentleman is coming from; he is heading in the right direction. I appreciate the points that he makes. He will know from the previous discussions on the regulations that flow from the White Paper that the industry had concerns about the need to change systems. The Government listened to those concerns as well as to those about the size of companies involved. Because the Bill has had widespread consensus and has been welcomed by all sides, it would only be fair to ensure that we did not impose burdens on business. Where there is a legitimate case for a timeframe to be put in place, we are happy to discuss that with the industry. Consultation will take place with all the interested stakeholders, ranging from small businesses and lenders to large companies that can accommodate change quicker than the rest. The hon. Gentleman will know that in the context of better regulation, the Government are required to ensure that all changes that take place are proportionate. Changes will be implemented after secondary legislation, and  following full discussion and consultation with all necessary stakeholders.
On the question of Northern Ireland, I agree with the hon. Gentleman that the sooner the situation can be resolved for the Assembly, the better; it is in the best interests of all concerned. On this Bill, Northern Ireland Ministers specifically requested that jurisdiction be extended to Northern Ireland. That will be reviewed following any subsequent change in the circumstances in Northern Ireland. 
Given those explanations, I hope that members of the Committee will support this, the final, clause. 
Question put and agreed to. 
Clause 71 ordered to stand part of the Bill.

New clause 1 - OFT'S GENERAL DUTIES

'After section 1 of the 1974 Act insert— 
''1A OFT's General Duties 
(1) In discharging its functions under this Act to regulate the conduct of licensees, the OFT must, so far as is reasonably possible, act in a way— 
(a) which is compatible with the regulatory objectives, as set out in subsection (2); and 
(b) which the OFT considers most appropriate for the purpose of meeting those objectives. 
(2) The regulatory objectives are— 
(a) lender confidence, to ensure the widest possible access to credit; 
(b) the protection of consumers; and 
(c) the national interest in having an efficient and innovative consumer credit sector. 
(3) In discharging its functions to issue guidance and regulate the conduct of licensees, the OFT shall have regard to— 
(a) the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction; 
(b) the desirability of facilitating innovation in connection with regulated activities; 
(c) the desirability of maintaining a competitive market in consumer credit in the United Kingdom; and 
(d) the need to minimise the adverse effects on competition that may arise from anything done in the discharge of its functions.''.'. 
—[Charles Hendry.] 
Brought up, and read the First time.

Charles Hendry: I beg to move, That the clause be read a Second Time.
The new clause relates to the OFT's general duties. On Second Reading, hon. Members of all parties expressed concern about the wide and open powers provided to the OFT in the Bill. The OFT has scope to discharge those powers, and to regulate the conduct of licensees practically unfettered, as we have discussed. It is given a free rein to impose requirements and penalties based entirely on loose concepts of unacceptable conduct. What the OFT says is what goes. With such wide-ranging powers, it is striking that the Bill contains no provision specifying the objectives and purposes towards which the OFT must act, particularly in a Bill that sets out to achieve so much. 
By introducing an objects clause, new clause 1 provides an important means of ensuring that the Bill achieves the purposes that Parliament has in mind. It is also a vital means of maintaining parliamentary control over the OFT—again, something that is distinctly lacking in the Bill. There is no good reason why such provision should not be included in the Bill. Indeed, it is invariably the case that Parliament controls the exercise of the discretion enjoyed by a regulatory body. The Financial Services and Markets Act 2000 is perhaps the best example. In the opening sections, the ground rules with which the Financial Services Authority has to comply are made clear. 
I challenge the Minister to give a single suitable reason why the OFT should not be subject to the same control in this Bill. Surely the interests of consumers will be better protected if the body that seeks to protect them is clear about what it is trying to achieve. The dangerous alternative is to leave the OFT to make things up as it goes along. That is not good regulation, and could be immensely damaging for consumers. Such a provision would also ensure that the industry was much clearer about what was expected of it by the OFT. At present, that clarity is not there.

Gerry Sutcliffe: The hon. Member for Wealden is less vociferous in his opposition to the OFT than was the hon. Member for Hornchurch, who spoke from the Front Benches on the last occasion on which we discussed the matter. His hon. Friend was concerned because anything to do with the OFT excited his well-known interest in horse racing and the OFT's deliberations to that effect, to the point at which his opposition to the OFT became almost obsessive.
As I reminded the hon. Member for Hornchurch this morning, hon. Members would do well to look at the Enterprise Act 2002 and the Competition Act 1998 with regard to the need to separate Ministers from interfering in markets that are performing well. It is right that we set the framework, and I do not believe that the OFT is completely unfettered, as the hon. Member for Wealden suggests. The way the OFT should act with regard to its consumer credit functions is set out in sections 1 to 5 of the 1974 Act. That includes keeping under review both the Act and the relevant social and commercial developments; enforcement and working of the Act; production of information; advice; and annual reporting obligations on the operation of the Act. 
The provisions of the Bill should be read in conjunction with the provisions of the Enterprise Act 2002 relating to corporate governance and the OFT board requirement for annual reports. The OFT's general functions are set out in sections 1 to 8 of that Act. The ground rules for the operation of the OFT were laid down when Parliament debated the 2002 Act. The OFT is subject to the usual range of accountability measures, such as scrutiny and appearance before Committees of the House. In addition, as a signatory to the Cabinet Office enforcement concordat, it is under an obligation to act proportionately. It is committed to minimising the cost of compliance for business by ensuring that any action that it requires is proportionate to the risk, and  by taking into account the circumstances and the attitude of the operator. 
The OFT is, therefore, already required to do what is required by the new clause. I hope that, having heard that explanation, the hon. Gentleman will withdraw the new clause—unless he, too, has an obsession about the powers of the OFT going too far.

Charles Hendry: The Minister should be well aware that the modern Tory party has nothing to do with obsession. We have moved on. Many of us here are so modern that if it were not for our respect for the Chair, we would not be wearing ties, and the suggestion that we have obsessions is simply out of date. I understand where the Minister is coming from—he is heading in the right direction. However, at this stage we are clearly not going to get the degree of clarity that we seek. There is a case for the new clause; I shall not push the matter to a vote, but perhaps the issue could be reviewed further in light of their lordships' experience when the Bill goes to another place. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 2 - OFT GUIDANCE

'After section 183 of the 1974 Act insert— 
''183A OFT Guidance 
(1) No guidance is to be published under the 1974 Act without the approval of the Secretary of State. 
(2) In preparing or revising guidance under that Act the OFT shall consult such persons as it thinks fit.''.'.—[Charles Hendry.] 
Brought up, and read the First time.

Charles Hendry: I beg to move, That the clause be read a Second time.
The Minister and I could almost swap places, as we know each other's phrases so well. I am sure he will know where I am coming from on new clause 2. He has stressed time and again that improving transparency is one of the fundamental aspects of the Bill. We all support that aim, but certain aspects of the Bill will not achieve it; indeed, some will serve only to blur the legal situation. 
Far too many significant policy areas have been left to secondary legislation and guidance from the Office of Fair Trading. That not only creates uncertainty for consumers, businesses and enforcers but means that Parliament does not have the opportunity to consider vital detail that is relevant to the Bill. That issue was raised many times on Second Reading and has been raised many times in Committee. 
As drafted, the detail of key features of the Bill has been left to be developed by the OFT, which is an agency over which the Government have no ministerial control and which operates as the regulator in its area. The result is that the OFT could become both judge and jury. That is bad legislation and not how we should move forward in trying to protect consumers. Instead, we should try to ensure the transparency that the Minister said that he wants. 
The new clause will achieve just that, by requiring approval from the Secretary of State before OFT guidance is published and requiring the OFT to consult relevant stakeholders on the content of that guidance. That builds in essential safeguards, by enabling the Secretary of State to ensure that the OFT acts in accordance with Parliament's wishes, while not interfering with the detail of that work, and ensures that those affected have the chance to influence the OFT's direction before it is set in stone.

Gerry Sutcliffe: The new clause undermines the independence that Parliament gave to the OFT under the Enterprise Act 2002. When that Act was passed, Parliament concluded that the OFT should be independent of the Government and exercise its functions independently of Ministers. To that end, it was constituted as a non-ministerial department, under the control of a chairman and a board.
The new clause goes against that approach and would require the OFT to submit its guidance on issues under the legislation to Ministers for their approval. That would mean that the OFT would no longer be independent and that, before it could publish documents, it would have to obtain ministerial clearance indicating how it could enforce consumer credit legislation and which issues it could take into account when doing so. The OFT would no longer be a regulator independent of the Government. 
The only aspect of the legislation that requires the OFT to obtain ministerial clearance concerns the statement of policy in relation to civil penalties. That is a special case, which allows the OFT to impose fines for breaches under the licensing regime. That goes beyond the OFT's normal role as a market regulator. The other guidance provided for by the legislation is not the same, and nor is the requirement made in respect of the guidance provided for in the Enterprise Act 2002. 
Proposed new section 183A(2) in new clause 2 permits the OFT to consult such persons as it thinks fit when preparing guidance. The proposal is unnecessary, because the relevant provisions of the Bill and the Enterprise Act concerning unfair relationships already require the OFT to consult on the guidance. In light of that information, I hope that the hon. Gentleman will withdraw the motion.

Charles Hendry: I am grateful to the Minister that it is clear where his thought processes are going. He is not prepared to shift, but we have made the point. In the light of that I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 3 - CREDIT TOKENS

'(1) It shall be an offence to give a person an application form for a credit-token unless he has specifically requested it. 
(2) To comply with subsection (1), a request must be made by the applicant by way of— 
(a) a document signed by that person; 
(b) a recorded telephone call by that person to the person or company offering the credit-token; or 
(c) an electronic form of communication, the origin of which can be authenticated. 
(3) Any approach to a person offering a credit-token application must include a full statement of the legal liabilities and responsibilities associated with such a token.'. —[Charles Hendry.] 
Brought up, and read the First time.

Charles Hendry: I beg to move, That the clause be read a Second time.
Although the new clause refers to credit card tokens, it concerns the issue of credit card cheques, which was raised several times on Second Reading in this Parliament and in the previous Parliament. The new clause is a simple, probing new clause. It is designed to outline our dissatisfaction with how credit card cheques work and to see whether something can be done to tighten the process up in the interests of the consumer. 
The new clause is intended to stop the sending of unsolicited credit card cheques. I accept that some have some benefit. For example, in buying something, there is no transaction fee. If one uses a credit card to buy something, one sometimes pays a transaction fee to use the card; with a cheque that does not apply. It is also useful when someone needs money desperately: perhaps the plumber has come to do some emergency repairs, but will not take a credit card. A credit card cheque makes it possible to settle that bill without taking the money directly from one's account. 
However, there is a great temptation to overspend. The credit card cheques are not time limited and can sit in a drawer for year after year, until, when times get a bit tough, they can be used. People might be inclined to use them at times when they are not thinking of the consequences. I recognise, however, that people cannot spend beyond their existing credit limit. [Interruption.] I am sorry that the hon. Member for Eccles (Ian Stewart) is finding this a bit tiresome, but it is important. I noticed that he was yawning while the Minister was speaking, too, so it is not just me.

David Taylor: Order. Could we return to new clause 3?

Charles Hendry: We want to make lenders more responsible. The banking code rules have been tightened to cover some of the relevant issues. Can the Minister confirm that the cheques can no longer be issued to people who are nearing their credit limit or struggling to pay? Those are the sort of assurances that we want. Will he also consider the idea that customers should have to opt into receiving credit card cheques, rather than opting out of them? At the moment, when they enter a new credit card agreement, they must say, ''I do not want to receive these.'' That means that they can be sent without ever being requested.

Michael Jabez Foster: Is not the bigger problem something that the hon. Gentleman has mentioned already—the fact that as long as spending is within the limit there is not an increased credit obligation, but that the practice is, I understand, sometimes to send the cheques with an invitation to increase the limit? That increased limit is  the problem. It is unsolicited, and that may be the aspect of the matter that should give rise to concern.

Charles Hendry: The hon. Gentleman may have seen that new clause 4 covers exactly those issues of the raising of credit card limits without the agreement in advance of the proposed recipients. I agree that that is where the practice is at its most dangerous. The fact that someone can still spend only up to their limit is protection, but if it is possible to spend significantly beyond that, there is a risk of spending money that cannot realistically be paid back.
The restrictions would not apply to invitations to apply for credit cards in general. They would specifically relate to credit card cheques. Many representations were made on Second Reading about the need to tackle this matter—as, indeed, happened when the Bill was introduced previously. I hope that the Minister can give the Committee some reassurances.

Gerry Sutcliffe: The Government will resist the new clause, but not because we do not know where the hon. Gentleman is coming from—we do. He admitted that the provision might be too widely drafted so that it would encompass all credit tokens, which was not his intention. He explained his focus and the reasons for it.
The hon. Gentleman will know, because he has read the debates and will have heard me say so on Second Reading, that during the previous Parliament a vast range of hon. Members were concerned about credit card cheques. In response, I undertook to consider the need for secondary legislation to improve transparency in the matter of credit card cheques. As I said then, the issue is more one of transparency than anything else. Just receiving a cheque will not increase a consumer's indebtedness, but consumers should know what they are about and the implications of using them. Consumers should have clear information when an agreement is made, including information about charges. 
We are considering what information—including warnings—should be provided at the time when the cheques are provided. The DTI is having discussions with the industry and consumer groups to reach a solution that will provide appropriate protection for consumers. We are actively considering what to do and the best way of addressing many of the issues that the hon. Gentleman has mentioned, but I am confident that we can deal with that through secondary legislation.

James Brokenshire: The Minister said that indebtedness would not increase as a consequence, but there could obviously be a difficult situation as consumers might not necessarily be aware that higher rates of interest may apply or that there could be shorter interest-free periods. Indebtedness could increase through that, hence the need for more warnings when the cheques are issued to protect consumers. I welcome the Minister's comment that he will look at that seriously, although we would say that it is better to act in the Bill rather than later.

Gerry Sutcliffe: I am again grateful for the hon. Gentleman's remarks, and I know that he is sincere in  his comments, as are the Government in our undertakings. The new clause is not drafted appropriately to work in the way that he would want, but we will deal with the issues that it raises. We believe that secondary legislation is most appropriate, and when we are in a position to consult on the regulations, that will be a useful time to speak to the Opposition parties about whether we were right or not.
With that assurance, I hope that the hon. Member for Wealden will not pursue his new clause.

Charles Hendry: I am grateful for the Minister's assurances. All Members will be pleased to know that the Government are considering how to address the issue. I accept that the new clause is not drafted correctly and, in the light of that, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 4 - CHANGES IN CREDIT LIMITS

'(1) It shall be the responsibility of a lender to ensure that any increase in a credit limit made on an unsolicited basis to a debtor is reasonable and affordable, before agreeing any such increases with a debtor. 
(2) It shall be the responsibility of a lender to ensure that any increase in a credit limit has the written agreement of a debtor before any such increase is granted. 
(3) Any lender who fails to meet the requirements set out in subsections (2) and (3) shall be subject to penalties to be determined by regulation.'. —[Charles Hendry.] 
Brought up, and read the First time.

Charles Hendry: I beg to move, That the clause be read a Second time.
We are making good progress, and we have perhaps reached the debate when the Minister will not just say that something is excellent but go along with us on it. 
Again, the proposal deals with an issue raised on Second Reading. In that debate, I referred to my experience of having a credit card that I used only for petrol, perhaps spending £200 a month on it. Without any request from me, the card issuer has raised the limit on several occasions so that it is now £3,500. The issuer has never checked whether I could afford to spend to that limit, and the hon. Member for Hartlepool (Mr. Wright) expressed concern about that issue, too. 
I recognise that the banking code has been changed, but I hope that the Committee will see that there are grounds for doing more. The banking code says that all issuers must assess a customer's ability to repay before increasing a limit and must make appropriate checks on the customer's risk profile and apply proportionate increases. They must not apply increases to accounts in arrears or those that fall below credit scoring thresholds, they must consider emergency limit increases individually—when a specific transaction will go over the customer's pre-agreed limit—and they must always assess the customer's ability to repay. 
What the code does not include is any requirement to contact the customer. Banks can just go through records, contact credit agencies and find out what the  person's credit rating has been. They do not have to contact the person to ask whether such an offer would be welcome and reasonable or to ask what assurance they could give that they could repay the money. The new clause would put the onus on the lender to ensure that the customer can afford a higher limit and to get the customer's agreement in writing before finalising an increase. 
The new clause must be seen against the background of concern about rising debt levels, which we discussed earlier. There is growing anxiety in the Bank of England about debt levels, and we are right to address that now. We are seeing a growth in the number of people who cannot pay their debt and a growth in mortgage arrears and repossessions. All that should make us wary of allowing a situation to continue in which people can simply have their credit card limit increased. As the hon. Member for Hastings and Rye (Michael Jabez Foster) said, before those people have such a limit available to them, it must be certain that they can repay the money. Currently, the debtor's circumstances are currently not checked when those limits are raised. That cannot be considered responsible lending.

Gerry Sutcliffe: It is appropriate that we end our deliberations on new clause 4. I thank the hon. Member for Wealden for drawing the attention of the Committee to this important issue. I know where he is coming from and where he intended to go, but he went too far, I am afraid. The new clause goes beyond prohibiting unsolicited increases and also bans solicited requests for increases not made in writing.
As for the sentiment underlying the amendment, the concern expressed by the hon. Gentleman is not new, as he says. Unsolicited credit limit increases have been an issue of concern for some time. During the last Parliament, the Treasury Select Committee examined the issue in some detail and expressed its concern, and businesses undertook to improve the processes through self-regulation. 
As the hon. Gentleman said, the industry has done much through improvements to the banking code to improve the processes through which credit limit increases are made. The changes were included in the new version of the code, published in March. At the time the Government welcomed the new guidelines, as did the Committee. We look forward to seeing the industry's response to the Committee's recommendation to restrict unsolicited increases in credit limits. 
The Government welcome effective self-regulation by business when it improves the quality of business practices, serves to protect consumers and enhances the services that they receive. Effective self-regulation is as critical to the proper functioning of the market as formal regulation through legislation. The industry is on notice on the matter, and we look forward to its taking an effective approach to address the concerns expressed by hon. Members, which have existed for some time.

Michael Jabez Foster: Will the Minister assure us how he will present his position if the industry does not come good? This is the opportunity to do so, and it may not arise again.

Gerry Sutcliffe: As I have said, we believe there are opportunities to deal with the matter through secondary legislation. However, it is only fair that we give the banking code, since it came in in March, an opportunity to prove its worth as the industry reaction to the severe strength of feeling from the Treasury Committee and other hon. Members. The industry is on notice. If it does not deal with the issue in the way that the code offers it the opportunity to do, we will take action. I give my hon. Friend that commitment.
I hope that the hon. Member for Wealden, who was quite right to raise the issue in the way he did, will withdraw the new clause because of the assurances that I have given and the opportunities that will arise in future to take action if things do not improve.

Charles Hendry: We have come from every direction, and we now know that I have finally gone too far. In many ways, I am disappointed by the Minister's response. He referred to the banking code, but the code is still inadequate because there is no requirement to talk to the borrower or the debtor. All the research into finding out whether somebody can afford to repay a higher level of borrowing will simply be based on information that can be obtained from credit rating agencies and other people like that. No check is required to find out whether the person involved thinks it affordable.
The people we are most concerned are those who are most honourable and would not use credit most of the time. However, they will suddenly think that because it is Christmas, they want a holiday, or to buy a present, and because they know that their limit has been extended, they will go and spend beyond it. We have seen some terrible cases. The Minister referred, as did I, to one where someone ultimately committed suicide because they had over-borrowed and had a range of different cards—that leads us to issues of data-sharing, which we will come back to on Report. We know that there were not enough safeguards in place. The Minister says that the banking code has been tightened up since then, but I hope that he would be prepared to go further, and that if he believes the approach is right but the amendment goes too far, we might work with, say, the hon. Member for Hastings and Rye to find an alternative form of words in which to draft a Government amendment on Report. I believe that the whole House wants this issue to be addressed.

Gerry Sutcliffe: I see some merit in having a discussion not only with the hon. Member whom the hon. Gentleman identified but with the industry itself. Perhaps then we can persuade the industry to tell us why it believes that the banking code will meet the requirements, as it has already told the Government. It is not, however, practical to meet interested Members and the industry to try to hammer out a solution that we can bring back on Report.

Charles Hendry: I am most grateful for that offer and that reassurance. In the light of that, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

Gerry Sutcliffe: On a point of order, Mr. Taylor. It is usual at this juncture to thank you and your co-Chairman, Mr. Conway, for your excellent chairmanship of our proceedings on a Bill that has been brought before the House before but that needed to be scrutinised in detail by Committee members. I pay tribute to that scrutiny, to the amendments tabled by the Official Opposition and the Liberal Democrats, and to the contribution made by all Committee members in trying to get the Bill through appropriately. I recognise that there are some issues that we shall return to on Report, and I am sure that the Bill will be given a good airing in the other place.
I also thank the Committee secretariat, the Hansard reporters, the police, the Committee Clerks, my DTI team who have supported me throughout the proceedings, and the Labour members of the Committee, including my hon. Friend the Member for Eccles, who has a tendency to yawn on numerous occasions, particularly when I am speaking.

Ian Stewart: I was not yawning, I was stretching.

Gerry Sutcliffe: Whether yawning or stretching, he still has the propensity to do whatever he does.
This is an important Bill, which is likely to be the first to receive Royal Assent in the new Session, once all passages are complete. That shows the Government's commitment to ensure that consumer credit is made actively transparent in the way that we have set out. 
I also thank the Government Whip, who is the most important person on the Government Benches, for ensuring that a majority has always been in place and that we have had a good discussion through the usual channels with the Opposition Whip.

Charles Hendry: May I associate myself and my hon. Friends with the Minister's tribute to you, Mr. Taylor, and to Mr. Conway for the way in which you have chaired the Committee? I, too, thank the Clerks and the members of the other House of Commons teams for the support that they have given us, and the DTI team for the support that it has given the Minister.
The Committee has been enjoyable and productive, and I am particularly grateful for the way in which the Minister has conducted it. He has been courteous at all times, as well as extremely open and friendly. He has, however, said no rather too often. He described one of  my amendments as excellent, and another as good but not excellent, so I was clearly getting worse as we progressed. ''Heading in the right direction'' has been the predominant comment, which is a little like ''could do better'' on my children's reports. At least we are heading in the right direction, which is something to be encouraged about. 
We put a tremendous number of questions to the Minister, and I am grateful that he will reply in writing to some of them, because we do need greater clarity before the Bill reaches Report, and certainly before it goes to another place. 
I am very grateful to my hon. Friends for their support. They have shown a tremendous amount of legal expertise and great understanding of the issues involved. All members of the Committee have brought constituency experience to the debate. These issues affect all our constituents, and I am particularly pleased that the Government saw fit to put on their side of the Committee people who might not always make helpful comments but whose sincerity cannot be doubted. I think particularly of the right hon. Member for Leeds, West, whose depth of experience in dealing with these issues has the admiration and respect of the whole House. 
We are also grateful that the Liberal Democrats popped in from time to time—[Laughter.]

David Taylor: Order.

Charles Hendry: It has been a productive Committee, Mr. Taylor, and we have made progress. I am most grateful to you and Mr. Conway for chairing us so effectively.

Alan Reid: It has been a friendly Committee, at least until now, and we have had some interesting discussions. I shall not rise to the bait, Mr. Taylor, but simply thank you and your co-Chairman, Mr. Conway, for the efficient way in which you chaired our proceedings. I also thank the Minister; he may always have said no, but he never failed to give a full explanation and he always handled matters courteously.
The Bill is important for our constituents. As someone new to DTI business, I found our discussions interesting. The Committee certainly dealt with the Bill effectively and efficiently. We shall return to the one or two items that remain outstanding on Report. I am pleased that, as the Minister said, it will be on the statute book quickly. 
Bill, as amended, to be reported. 
Committee rose at twenty-six minutes past Six o'clock.